Just days before he submits his budget to the City Council, Mayor Thomas Menino gave some insights into his priorities and challenges in his annual address to the Dorchester Board of Trade on Tuesday afternoon.

Menino — who is widely expected to run for re-election this fall — said he foresees a $78 million cut in local aid, money that comes from the state and goes to city coffers for local programs, in the fiscal 2010 budget, on top of a $23 million cut this year.

Menino said he hopes to extract additional revenues from the city’s own contractors.

“There’s a lot of vendors the city does business with,” Menino told the Reporter on Tuesday after his speech at the Venezia Restaurant. “We’re going to ask them to help us during this difficult time. I know they’re having difficult times, also. But if we can all work together, we can share some of the responsibility.”

The vendors, who will be asked to ease up on their contracts with the city, include engineering companies and other types of suppliers to the city, Menino said.

Even with the cuts, Menino said he expected some city employees to lose their jobs. “We will have some layoffs, no question about it,” he said.

The comments come as both the city and the state are grappling with steep drops in revenue and cuts to local programs because of the worsening economy. Boston must deal with a $100 million budget gap, according to Menino, who has called on unions to accept a wage freeze that will eliminate about half the deficit.

Menino has also been pushing on Beacon Hill for increases in meals and hotel taxes, along with a long-time tax exemption for telecommunications companies for their poles. Gov. Deval Patrick has also filed similar legislation.

House Speaker Robert DeLeo, a Winthrop Democrat, said this week he was open to lifting the telecommunications tax exemptions, but voiced uncertainty over meals and hotels tax increases.
“I’m not going to say doubtful, but I don’t think it’s something that’s been brought to the forefront by the members,” DeLeo told the State House News Service.

Menino defended the meals and hotels tax. “Every city and town has restaurants,” he said. “And each city and town can make money off it. Hotels…we have one of the lower hotel excise taxes. We’ve got to look at this. It’s got to be a statewide policy.”

Patrick’s budget estimates that a statewide 1 percent increase on the meals and lodging taxes would raise about $150 million. He also wants cities and towns empowered to impose 1 percent hikes on their own, worth roughly another $150 million, along with the telecommunication revenues.

Patrick’s plan would apply property taxes to telephone poles and wires, a new tax the Mass. Municipal Association estimated as worth $26 million, as well as switching equipment, which the MMA projected could net between $25 million and $50 million.

Menino expressed concern that the Legislature, in taking up on the telecommunications tax exemption, have “devalued” the money Boston would receive by several million dollars.
“I appreciate everything we get from the Legislature. But the way they’ve re-written the telecom bill, the value to the city is much less than it was originally,” he said.

Menino also said he would provide $4 million to the city’s summer youth job program. Federal stimulus funds could end up bringing the full figure to $8 million. It remains unclear whether that will be enough to meet the demand.

“I’m level-funding that no matter what,” Menino told the crowd of Dorchester business owners at Venezia Waterfront Restaurant in Dorchester’s Port Norfolk area.

At one point, as he ticked through the city’s high bond rating, Menino joked, “It’s like a report card I’m giving you.”

Asked afterwards what grade he would give himself, the 15-year mayor said, “The people of Boston make that decision. I don’t give myself a grade. I just work hard.”

While widely expected to be in the running, Menino has not formally announced whether he’s a go for a re-election bid. City Councillors At-Large Michael Flaherty and Sam Yoon and South End businessman Kevin McCrea have all announced their candidacies.

Material from State House News Service was used in this report.